General News
6 May, 2021
Thumbs Up With ScoMo
PROPERTY owners in Northern Australia could be offered more affordable and accessible home and business insurance with the announcement of a $10 billion reinsurance scheme.
Prime Minister Scott Morrison visited Cairns earlier this week to announce a raft of projects and funding designed to bolster the north’s economy.
The reinsurance pool will cover cyclone and related flood damage in northern Australia from 1 July 2022 and is backed by a $10 billion government guarantee.
This will reduce insurance premiums across Northern Australia by over $1.5 billion for households, strata and small businesses over 10 years.
For a number of years, insurance underwriters have backed away from the North Queensland market, declining to provide coverage to many areas north of the Tropic of Capricorn. After the announcement of the reinsurance scheme, Suncorp, the largest insurer in North Queensland pledged to work with the Government to improve insurance affordability.
Suncorp Group CEO said, “Having stood by communities in the North for over 100 years, we understand the issues and it is time for all levels of Government and the insurance industry to work constructively to design and deliver affordability relief for those living in Northern Australia.”
More than 500,000 residential, strata and small business property insurance policies in Northern Australia are expected to be eligible to be covered by the reinsurance pool.
With so few insurance underwriters in the market many strata title properties are spend more than 30% of their body corporate fees on property insurance.
Prime Minister Scott Morrison said the plan shows the Government is listening to Australians who live in the North of the country.
“We believe in the future of Northern Australia. This means we need to take further action to boost the resilience for Australians to live and work in northern Australia,” Mr Morrison said.
“Our plan will give more Australians in cyclone-prone areas access to affordable insurance.”
Federal Leichhardt MP Warren Entsch said this is an absolute game changer for families and businesses in Cairns and right across Far North Queensland.
“The high cost of insurance has been absolutely crippling to so many households and businesses,” Mr Entsch said.
“This announcement will drive down insurance prices, put more money in people’s pockets and give Far North Queenslanders the ability to actually insure their home, unit or business.
Owner of Cairns’ business The Cotton Club, Dominic Davies welcomed the announcement.
“What it means to our business is that we can plan with certainty. It’s not having to worry about the volatility that results from not many underwriters in the market.
“So we can reinvest in our business. here in the north, it’s really important to the mums and dads operators, which pretty much are a huge part that drive the Cairns economy.”
The government is also announcing a plan to specifically reduce insurance costs for strata properties, by committing $40 million for the North Queensland Strata Title Resilience Pilot Program, to start in 2022.
Strata properties face some of the worst insurance affordability pressures in Northern Australia.
The ACCC noted that, in 2018-19, the average strata premium was $6,800 in North Queensland, compared with the Australian average of only $3,300.
Strata residents have few options other than to pay this because strata properties are required to hold insurance under Queensland legislation.
